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COBRA and Health Insurance–Do you have to pay through the nose, or is there a way to save?

03-06-2009 by Colleen King

COBRA–good news or bad news? These days people are either losing their jobs, their health insurance or both. What do you do? I know people aren’t always thrilled with their group health insurance plans but it’s scarier to think of being uninsured if you’ve ever heard the costs one can incur. But then you find out how much your COBRA coverage will be and wow–you need it at least long enough to get out of the CCU from your heart attack.

When COBRA, the option to be able to continue your health coverage when leaving a job first started years ago, people generally thought it was great. This applies to companies with more than 20 employees. But the cost of many group plans is extremely high; most didn’t realize how much their employer was paying to cover them. With COBRA, you pay the entire amount of the premium plus 2-4% administrative costs. In California, we have CalCOBRA which functions similarly but with administrative costs of about 10%.

So now, what’s the big deal? Why is COBRA so great? Well if you are insurable on an individual plan you don’t need to stick with the COBRA offering. But if you aren’t insurable, all of a sudden it’s usually the best deal in town. You need to decide within 63 days of when your coverage ended whether or not to take it. What I’ve done with several families is help them select individual health insurance plans for the members of the family that are insurable and leave the ones that aren’t on the COBRA plan. And it doesn’t always have to be the former employee that stays on the plan, you need to find that out from your former employer.

So check out your options. You might be surprised at the possibilities. Contact an independent agent, like me, before you throw in the towel.